Debt: Upside-Down and Empty

Three months ago, I walked into my favorite store in the Otay Ranch mall to look for a jacket. I walked out two hours later with the jacket, two pairs of jeans, six tops, and an $850 credit-card bill. A week later, I went back to return two of the tops and ended up adding $300 more to that credit-card bill. Then, three days later, another $200. On the days in between, I got my hair cut, bought make-up, purchased a few things for the house at Ikea, went out to dinner several times, and bought gas and groceries. After two-and-a-half weeks, my card went from a zero balance to $2700 — at 19 percent interest.

My husband knew nothing about it. He thought that the credit card was hidden in a box in his office, because I’d already proven it’s best for me not to carry it in my wallet. In times previous, I’ve had what I like to call my Lucille Ball moments: about once a year, I must confess to an extra $500 or so in credit-card charges. My husband steps in as Ricky Ricardo, stomps his foot, wags his finger, and fixes the problem. And I promise to never, ever, ever do it again.

This time I kept spending and spending, despite no foreseeable way to hide it or to handle the growing balance on my own. After a week of waking up panicked in the middle of the night, I asked a friend for help in creating a budget. I also sucked it up and told my husband what I’d done.

Meanwhile, my friend Samira was dealing with her own set of money issues. Or rather, her husband’s issues, which had become her own.

Samira and Shoji filed taxes jointly for the first time this year. In the tax preparer’s office, Samira discovered that, rather than the $3000 she was expecting to get back from the federal government, she owed. The amount she owed was only $100, but the difference between what she expected and what she got was over $3000, so the loss seemed huge. It turned out that Shoji had withdrawn $15,000 from his IRA in order to pay credit-card debts he’d never mentioned to Samira.

When Samira, infuriated, told me what Shoji had done, I was appropriately appalled. At the same time, I sent out silent prayers of gratitude for my own financially responsible husband.

By the time I spoke to Shoji, it was a few weeks after his big blow-up with Samira. He’d had time to think about things. He was reading a book called Debt-Proof Living that his parents had given him a decade earlier, when he was 30.

“When I was growing up, my parents’ philosophy about money was to earn it and not spend it,” he said. “Save every penny. I ended up thinking there’s no point in working if you’re going to earn and not spend it. I thought, I’m going to spend as much as I want, whenever I want, and wherever I want. That’s the self-destructive philosophy I had.”

He spent his money on clothes, expensive dinners, wine-tastings, entertainment, trips to Las Vegas, and whatever else came up over the course of living and dating.

“I always wanted to give the impression that I was doing well,” he said. “Who wants to go out with a guy who’s not doing so well?”

He made it a point to inform me that, whether or not Samira likes what has come of it, while they were dating, she benefited from his spending.

“She knows,” he said. “She’d better know. I spent money on her, and we had a good time. But that comes at a cost.”

Before they married last June, Samira told Shoji she wanted to talk frankly about finances. He told her the total amount of his debt was around $2000, while the real figure was closer to $15,000. As soon as he told this lie, however, he went about making it true.

“That’s when I pulled out the IRA money,” he said. “I was, like, I gotta get rid of this [debt] fast.”

Shoji knew he could have had the taxes withheld from the distribution when he made the withdrawal, but he chose not to, because he wanted the amount of his debt to be as close to zero as possible at the time of his marriage.

“I’m not a bad guy,” he said. “I don’t drink a lot. I don’t do drugs. I don’t gamble. I don’t have someone on the side. I don’t have other kids. It’s just my stupid philosophy about money that got me where I was. I was trying to take care of it with what I had, and what I had was my retirement.”

As sympathetic as I was to Samira for having married a man with money issues, I also understood Shoji’s panic. If I’d had a retirement fund that could have saved me (if only in the short term) from having the “I’m in the hole for $3000” conversation with my husband, I might well have done the same thing.

Pay Us and We’ll Make the Payments for You

I read a 2010 article entitled “Do You Live in a High-Debt City?” on USNews.com, which stated that between 2007 and 2010 San Diego residents “reduced their overall debt load by ten percent, bringing it down to an average of $23,822.” This contrasted with Denver, which ranked as “the most indebted city in America, according to data collected by Experian.” At the time, Denver’s residents had an average debt of $26,636.

San Diego ranked in neither the top ten nor the bottom ten. Still, the article got me thinking: If the average debt in San Diego is almost $24,000, what are people doing to get rid of it?

According to Barry Lander, clerk at the U.S. Bankruptcy Court for the Southern District of California, 2009 saw the breaking of an all-time record high for bankruptcies filed in San Diego and Imperial counties. And at 23,069 filings, 2010 broke the 2009 record. Although Lander’s numbers do not separate the two counties in his district, he says the percentage that reflects Imperial County would be “a single digit.”